State House Sound Bites

Capitol reporter Katie Meyer covers Pennsylvania politics and issues at the Pennsylvania state capitol.
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Revenue hearings focus on contentious tax code proposals

Written by Katie Meyer, Capitol Bureau Chief | Mar 7, 2017 3:45 AM

The Senate's revenue hearing was full of partisan disputes over the best ways to make up the state's revenue deficits. (Photo by AP)

(Harrisburg) -- As in many states, revenues have been weak in Pennsylvania this fiscal year.

In a budget hearing before the Senate, Revenue Secretary Eileen McNulty told the chamber that corporate income revenues have been particularly bad. They fell by almost 10 percent from last year.

One of the solutions Governor Tom Wolf is proposing is combined reporting.

That's a tax collection method designed to keep businesses from sheltering assets in low-tax states to skip paying some corporate state taxes.

McNulty noted, it's a common practice.

"Combined reporting is presently used in 24 of the 44 states that have a corporate income tax to enable these tax planning strategies that enable the shifting of profits across state lines," she told Senate members.

But that provision in particular has seen pushback from Republicans, like Luzerne County's Lisa Baker, who says it would put undue burden on large companies.

"What this proposal would do would be sizeable and unsustainable and would make the cost of predicting their tax burden very very difficult," she said.

GOP members also raised concerns about other elements of the governor's plan, like new taxes on high-end tech and airline repairs, as well as a natural gas severance tax.

Pennsylvania is facing a projected budget shortfall of nearly $700 million by the end of the year, on top of a nearly $3 billion structural deficit. Wolf's tax package accounts for about a billion dollars of his total proposal.

Published in News, State House Sound Bites

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